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Abstract

This dissertation presents an examination of the pharmaceutical industry with a
primary focus on the importance of intangible assets from the original institutional
economics perspective. This is done in three main chapters. The first main chapter
examines the importance of intangible assets within the context of the heterodox theory
of the business enterprise. It is argued that in the early stage of the going concern –
where production is separate from consumption – intangible assets necessitate the
creation of monetary bargaining transactions. In industrial capitalism – with the
internal separation of the enterprise into industrial and pecuniary divisions – intangible
assets take the form of rationing transactions, limiting the number of sellers of a
particular product. As the enterprise then evolves into its modern joint-stock form in
money manager capitalism, intangible assets become the basis for capitalization, upon
which incorporeal property may be issued, increasing the return to shareholders.
The second main chapter discusses the structure and performance of the
pharmaceutical industry. Based on the concept of centralized private sector planning
and Alfred Chandler’s theory of learned organizational capabilities, I develop a core
nexus understanding of pharmaceutical industry activity. The core is seen as made up
of 15 firms who dictate the direction and evolution of the industry as a whole. I then
examine the performance of this core using measurements of financial ratios.
Measuring performance in this way is consistent with the stated motives of the business
enterprise under money manager capitalism, which embodies the dominance of
pecuniary habits of thought over industrial ones.
The third main chapter combines the first two, examining one specific member
of the core – the Pfizer Corporation – and examines the importance of intangible assets
on its activity. Over time, it is shown that Pfizer has become more reliant on intangible
assets as an overall portion of total assets, its net tangible assets – the book value of the
company – has become negative, and Pfizer relies more heavily on drugs obtained
through acquisition, rather than internal development.
Money manager capitalism, as a regime of accumulation, rewards enterprises
that take on an intangible characteristic. In the pharmaceutical industry, this is done
with the aid of mergers and acquisitions due to accounting rules for intangible items
such as goodwill and the division of labor between the core and nexus. Dominant
pharmaceutical firms, then, should be seen as rent-collecting institutions, as opposed to
productive entities.

Table of Contents

Introduction -- Intangible assets and the business enterprise: understanding corporate control over social relations -- Structure and performance of the pharmaceutical industry: an original institutional economic perspective -- Intangible assets and the Pfizer Corporation: the importance of mergers, acquisition, and strategic dealings -- Conclusion